Implications of COVID-19 Induced Lockdown on the South African Tourism Industry and Prospects for Recovery
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African Journal of Hospitality, Tourism and Leisure. ISSN: 2223-814X
February 2021, Vol 10, No 1, pp. 270-287
Implications of COVID-19 Induced Lockdown on the South African
Tourism Industry and Prospects for Recovery
Kaitano Dube*
Ecotourism Management, Vaal University of Technology, Andries Potgieter BlvD,
Vanderbijlpark, 1911, South Africa dubekaitano@gmail.com
*Corresponding Author
How to cite this article: Dube, K. (2021). Implications of COVID-19 Induced Lockdown on the South African
Tourism Industry and Prospects for Recovery. African Journal of Hospitality, Tourism and Leisure, 10(1): 270-
287. DOI: https://doi.org/10.46222/ajhtl.19770720-99
Abstract
South Africa has one of the largest and most developed tourism markets in Southern Africa. Consequently, the
sector's performance, therefore, has implications on the regional tourism market. In the advent of COVID-19,
South Africa emerged as one of the global and regional epicentres of coronavirus infections. In March 2020, South
Africa was one of the countries that adopted hard lockdown measures to control the pandemic. The consequent
sealing off of the country’s ports brought the tourism industry to a sudden halt. This study is aimed at examining
the impact and potential reopening strategies that the tourism industry can adopt in South Africa. The study is
based on critical document analysis of survey reports from South Africa’s National Department of Tourism, Stats
SA, Google Mobility and other authoritative, relevant sources. The study concludes that the pandemic had a
devastating impact on various sectors of the tourism economy. The most devastating industries include the
aviation, maritime, special events, accommodation and attraction sectors. The sudden halting of the tourism
industry threatened conservation efforts and the business viability of many tourism establishments. Consequently,
public and private airlines were liquidated or placed under business administration with far-reaching implications
for various destinations and travel sectors. The study recommends a well-engineered financial aid package for the
region's tourism industry, reduced tourism levies and taxes backed by the adoption of stringent health protocols
to help the industry recover and make travel appealing and attractive again. A robust vaccination program must
support such efforts.
Keywords: COVID-19, South Africa, tourism, recovery, hospitality industry
Introduction
The advent of the global pandemic COVID-19 brought about a flurry of global challenges. The
dreaded pandemic's economic and social ramifications have been devastating and are yet to be
fully quantified and comprehended. According to Gössling, Scott and Hall (2020), the COVID-
19 pandemic caused unprecedented economic disruption never seen before since World War
II. Economies in both developed and developing world across the social and political divide
have been grossly undermined by the pandemic, threatening the achievement of the Sustainable
Development Goals (SDGs) (Nhamo, Dube & Chikodzi, 2020b). Of all the affected sectors,
the tourism industry is one of the industries that have been worst affected by the disease
outbreak. The demand for social distancing that ensued resulted in the closure of borders and
other entry ports as countries and territories battled to control the disease. On the other hand,
the travel industry was blamed for its contribution to the spread of COVID-19 (Lew, Cheer,
Haywood, Brouder & Salazar, 2020).
The tourism industry, which is the mainstay of most developing and other developed
economies Nicola, Alsafi, Sohrabi, Kerwan, Al-Jabir, Iosifidis and Agha, (2020), thrives on
social mobility and interaction was left in a quandary resulting in a near collapse of some
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African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
Copyright: © 2020 AJHTL /Author(s) | Open Access – Online @ www.ajhtl.com
sectors and sub-sectors of the industry. According to Dube, Nhamo and Chikodzi (2020a), the
pandemic crippled the tourism and hospitality sector with far-reaching implications on
employment levels and job security for many in the tourism and hospitality sector. Another
study by Nhamo, Dube and Chikodzi (2020b) and also Gössling, Scott and Hall, (2020)
examined the pandemic’s sector-wide impact on the tourism industry.
Carr (2020) argued that the pandemic would have intergenerational consequences for
indigenous and non-indigenous people. According to Baum and Hai (2020), there are serious
concerns about the impact of COVID-19, particularly on the Global South. The region is touted
to be one of the most vulnerable, given its socio-economic and complex geographic context.
The region is also heavily reliant on tourism. Lindsey, Allan, Brehony, Dickman, Robson,
Begg and Flyman (2020) noted that in as much as COVID-19 induced changes could benefit
biodiversity in some ways in Africa, the pandemic induced changes were likely to be negative
in many ways. There are real fears that the cut-off of the tourism market supply would reduce
income for the conservation in protected areas. This could worsen poaching incidences and
undermine conservation activities when the world is battling species loss due to global climate
change. This is a concern in light of the increased incidences of poaching of endangered
species.
There is an acknowledgement that the pandemic has reset the global tourism economy
with far-reaching implications on local communities and tourism businesses (Higgins-
Desbiolles, 2020). Hall et al. (2020) also highlighted that the history of pandemics has shown
that they tend to have a revolutionary impact on the tourism industry. Therefore, there is a need
to take caution as such impacts are likely to be disproportionate across communities and can
result in unexpected and undesirable changes. In that light, this study seeks to investigate the
effects of COVID-19 induced lockdowns on tourism in South Africa and examine recovery
prospects for the tourism industry’s recovery. The study aims to answer the following research
question: What is the impact of prolonged hard lockdown on South Africa’s tourism industry
and its recovery prospects?
Impact studies of such nature are crucial in as much as they allow for tourism role
players to understand the current status to inform policy and practice. Given the centrality of
such studies, which are needed to understand how the pandemic’s impact is evolving and
affecting the tourism sector, the United Nations World Tourism Organisation has set up a
platform that monitors the global tourism sector. Similar studies have been conducted in
Malaysia (Foo, Chin, Tan & Phuah, 2020), Nepal (Sah, Sigdel, Ozaki, Kotera, Bhandari, Regmi
and Dhakal (2020), and India (Jaipuria, Parida & Ray, 2020), to mention but a few. Rogerson
and Baum (2020) argued that COVID-19 arouses new tourism research agendas in subjects
such as market confidence, community tourism, informal tourism sector resilience, to mention
but a few.
Literature review
The advent of COVID-19 at the end of 2019 and the disease's subsequent proclamation as a
pandemic on 11 March 2020 by the World Health Organization (WHO) resulted in global
market turmoil. One of the worst affected economic sectors was the tourism industry which
was crippled due to stoppages of people moving across the territories. The travel restrictions
that governments across the world imposed disrupted the tourism industry's supply and demand
(Dube, Nhamo & Chikodzi, 2021). The imposition of lockdowns came at a great cost to various
sectors of the tourism economy, such as casinos (McCartney, 2020), the car rental industry
(Nhamo, Dube & Chikodzi, 2020c), the leisure industry (Lee & Chen 2020), museums (Antara
& Shuvro, 2020), aviation industry (Suau-Sanchez, Voltes-Dorta & Cugueró-Escofet, 2020;
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Abu-Rayash & Dincer, 2020) and hotel industry (Hao, Xiao & Chon, 2020) to mention but a
few.
The chaos brought about by the COVID-19 pandemic had a devastating impact on the
tourism market, wreaking havoc on tourism company stocks (Nhamo, Dube & Chikodzi,
2020d) and other companies within the broader economic spectrum (He, Liu, Wang & Yu,
2020; Şenol & Zeren, 2020). In an attempt to rescue tourism companies across the world,
several market and fiscal initiatives were taken to ensure the survival of tourism companies
well beyond the COVID-19 pandemic peak. The COVID-19 pandemic had a devastating
impact on the socio-economic lives of tourism employees. Many tourism employees were
condemned to poverty as most companies adopted a furlough programme (Chen, 2020),
reduced working days, and some companies closed altogether, which resulted in job layoffs
(Suau-Sanchez, Voltes-Dorta & Cugueró-Escofet, 2020). Jung, Jung and Yoon (2021)
bemoaned the impact of COVID-19 on job security and turn over for hotel employees. The
study found that the impact of COVID-19 had been disproportionate and affected Generation
Y than Generation X. This attests to the much-acclaimed differential impact of the pandemic
on various groups of people. COVID-19 also had a damaging psychological effect on tourism
employees who had to deal with multiple challenges imposed by the pandemic and infections
(Mao, He, Morrison & Andres Coca-Stefaniak 2020; Ozdemir, 2020).
When the international tourism industry failed amidst the raging COVID-19 pandemic,
the New Zealand Government, for example, introduced several initiatives to assist the industry,
such as staff wage subsidy, providing stimulus packages to ensure the industry survives the
COVID-19 induced lockdowns (Carr, 2020). Evidence suggests that the indigenous people
and those from disadvantaged communities whose lives are largely dependent on the tourism
industry were going to bear the harsh brunt of the socio-economic impact of COVID-19 (Wendt
et al., 2021; Cohen & Mata-Sánchez, 2021).
This is particularly true for Africa, where the pandemic is expected to adversely affect
the marginalised community in a continent where tourism was one of the largest and fastest-
growing economic sectors (Nyasha, Odhiambo & Asongu, 2020; Palop, Mucke & Roberson,
2020) before the pandemic in 2020. Smith, Smit, Swemmer, Mokhatla, Freitag, Roux and
Dziba (2021) argued that the pandemic had a serious adverse impact on the national parks in
South Africa. South African National Parks rely heavily on tourists' revenue, which renders it
vulnerable as COVID-19 wiped off the tourism market, which was the main source of funding
for conservation and other projects. This confirms fears by Rogerson and Rogerson (2020),
who predicted the devastating impact of COVID-19 on the South African tourism economy
due to underlying vulnerabilities.
Understanding and tracking the impact of COVID-19 on the African tourism market is
crucial for policy planning for both the affected countries and the global community at large.
Such an understanding is crucial in informing strategies for recovery and future practice. It is
in that realm that this study is undertaken. Africa that is already battling multiple threats to its
economies such as climate (Abidoye & Odusola, 2015; Gizaw & Gan, 2017), toxic political
environment (Kisten, 2020; Dalyop, 2019) and economic stagnation (Lundahl, 2019) is likely
to require considerable support to recover from the economic ramifications imposed upon it by
COVID-19.
Given the significance of the impact of the COVID-19 pandemic, there have been calls to
reimagine the future research agenda for tourism. Zenker and Kock (2020) noted that there is
a need for the tourism industry to investigate how the tourism disaster will affect the
complexities of the tourism industry. Understanding how COVID-19 will affect tourism
behaviour, destination image, changes to tourist behaviour, how COVID-19 will alter host
community behaviours and understanding of the short and long term are issues that warrant
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robust engagement and debates going forward. Impact studies, therefore, are just a single step
in achieving that.
Study area
The study focussed on examining the impact of COVID-19 induced lockdown on the tourism
economy of South Africa. South Africa falls under the Sub-Saharan Africa region. South Africa
is a top-ranked tourism destination ranked number 61 in the Travel and Tourism
Competitiveness report in 2019 (World Economic Forum, 20019). Given the influence and
infrastructure that South Africa had before the COVID-19 pandemic including, a robust air
traffic system (Figure 1) and the size of its middle and upper-class population has a significant
impact on domestic and regional tourism development. It is also estimated that about 30% of
tourists who visit South Africa also visit other destinations in the region (Mhlanga, Steyn &
Spencer, 2018).
Figure 1: The SADC regional route mapwork of South African Airlines
Source: OR Tambo Airport (2019)
Research methodology
To respond to the set-out research question, the study makes use of archival and secondary data
from authoritative sources such as government reports, the United Nations agencies reports,
Stats SA reports and other industry reports. Jones (2010) defines archival data as information
that has been previously gathered by others that is amenable to systematic studies. According
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to Fischer and Parmentier (2010), archival data can be used as a primary source in research and
offers numerous advantages, particularly to consumer studies and related areas. Given that
archival data is easily available in most cases, costs are drastically cut, making it affordable for
researchers. The other advantage of archival data is that it can allow for longitudinal studies.
Archival data was augmented and triangulated with personal knowledge and personal
experiences gained from field observations in 2020. The researcher stayed at 15 different
accommodation establishments between October and December on a data collection exercise
in Western Cape, Eastern Cape, Free State, Mpumalanga, and Northern Cape. Only
authoritative and specialised industry sources were considered for this research, for material
published between January 2020 and 2021 were selected. Key search terms that were used
include COVID-19 impact on tourism, aviation, accommodation in South Africa. The focus
was on major reports published in business news articles, tourism sector organisations report
from national and provincial governments agencies. The study used quarterly reports from
Stats SA monthly reports on quarterly reports on accommodation from data collected from
tourism establishments, UNWTO dashboard for tourism insights, and quarterly reports from
Surveys conducted by the National Department of Tourism and the Tourism Business Council
of South Africa.
The study also made use of big data generated principally generated from COVID-19
Google mobility reports. The Google mobility reports are auto-generated from aggregated,
anonymised sets of data from users who have turned on the mobile phone Location History
setting, which is off by default (Google Mobility, 2020). The use of big data that includes GPS
and smartphone generated data traffic has been increasing in usage in tourism studies and is
considered valid (Li, Xu, Tang, Wang & Li, 2018; Tussyadiah & Inversini, 2015). Critical
document and thematic analysis were conducted to deduct results and make conclusions.
Results and discussion
The study found that, like any other part of the world, the pandemic’s impact on the tourism
industry has been devastating on the South African tourism market. The study found that
amongst selected leading tourist destinations in the Sub- Sahara Africa region, South African
tourism started on better footing than the previous year in 2019. International tourist arrivals
were largely in the positive territory between January and February. However, the situation
dramatically changed in March when COVID-19 was declared a pandemic (Figure 2). The
situation deteriorated in April and May 2020 at the height of lockdowns. When COVID-19
was declared a pandemic on 11 March 2020, most countries moved swiftly to close their
borders to avoid further importation of the disease and try to force the ‘flattening of the curve.
The international tourists' arrivals plunged to -86% year on year with a devastating
impact on hotel bookings, and air reservations being the worst affected. The intention to travel
amongst many tourists was also adversely affected, as was seen in other parts of the world (Luo
& Lam, 2020). April, May, and June of 2020 were the worst for the tourism industry, signified
by a very low business. The situation started improving in July under the developed and safety
protocols. By the close of 2020, the worst affected part of the tourism industry was the hotel
industry which was operating at -78% yearly, with air travel still subdued at -72%. Evidence
from UNWTO (2021) shows that the year was largely bad for the travel and hospitality sector
as the industry failed to offset losses made during the year 2020. This had far-reaching
implications for tourism growth and its contribution to national and regional development and
employment in the affected countries.
Inadvertently, South Africa, which had the highest number of infected people in Africa,
entered into a five staged lockdown calibrated from stage one to five in a bid to save lives and
livelihoods in response to the pandemic. Under the higher stage, category 5, the country was
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locked down with only essential service providers allowed to go to work and movement of the
citizen to buy essential supplies within their neighbourhood, which started on the 26 of March.
At stage 4 and stage 5, all airports, hotels, restaurants and other recreational facilities were
banned from operating except for emergency and repatriation services and frontline workers.
Limited travel was allowed under lockdown level three for essential workers, allowing for
business travel across provinces. Also, takeaway food service providers were allowed to
operate with dine-in prohibited. Provincial leisure travel was also allowed at stage 3 lockdown.
Interprovincial travel that allowed domestic travel only came into effect in August and allowed
airports and the airline industry to operate together with other tourism sectors under strict
adherence to set down protocols.
20
0
January February March April May June July August September October November December
-20
-40
-60
-80
-100
-120
International Tourists Actual Air Reservetaions Occupancy Rates
Hotel Searches Hotel Bookings
Figure 2: Regional overview of the impact of COVID-19 on tourism performance in the first half of 2020 on Sub-Saharan
Africa
Source: Author Data from the United Nations World Tourism Organization - UNWTO (2021)
Figure 3 shows the impact of lockdown on the travel and tourism industry on the Google
Mobility Index as measured against the median value, for the corresponding day of the week,
during the 5 weeks period Jan 3–Feb 6, 2020. The study shows that there was a significant
decline in the mobility of tourists at various transit stations and other recreational facilities in
the country between March 30 to about April 16, which coincides with the hard lockdown,
which was instituted right about the same period on the 26th of March 2020. The study found
that hard lockdowns adversely affected people movement, particularly between March and
April. Post that, there was some improvement, particularly under level 2 and leve1 lockdown,
which took place in August and September, respectively. There was significant movement at
transit stations, retail and recreation places and parks which lasted up to December when a
second wave resurgence forced the country into an adjusted level 3 lockdown scenario. Even
at the peak of travel in December 2020, before moving the country into adjusted level 3
lockdowns, the traffic failed to reach the levels prior to the declaration of COVID-19 as a
pandemic as people mainly stayed at home. Such a scenario had an adverse effect on the
tourism and travel sector in the country.
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There is clear evidence from Figure 3 that despite a relaxing of travel restrictions, there
was not a full uptake of the tourism products by both local and international tourists as fear
could have been the limiting factor for people to go out and enjoy. With regards to international
tourists, the situation was much more complex as key markets policies on international travel
kept on shifting, which made it difficult for travel planning. During the second wave, most
countries discouraged their citizens from travelling abroad, with some market instituting hard
lockdowns. The situation was further heightened by the emergence of COVID-19 variant
N501Y in South Africa. This variant was discovered at a time when vaccines had just been
developed. The N501Y variant, which was dubbed the South African variant, caused many
countries to red flag travellers from South Africa and resulted in cancelling of flights to and
from South Africa and other SADC countries. This had dire consequences for the international
tourism market to South Africa and the SADC region as key markets such as Britain and the
USA issued travel bans to South Africa.
Figure 3: COVID-19 South Africa Google Mobility Index from 10 February to 11 January 2021
Source: Author Data from Wits University (2021)
In response to the decline in tourism demands, most companies instituted cost-cutting
measures such as furloughs, salary cuts, retrenchments and other such measures. ' Salary cuts
and suspensions during the lockdown period left many people with no income to spend on
travel and tourism often considered a luxury by many. Uncertainty and job losses are another
factor that led to poor uptake of the tourism product even under lockdown level 1, which
allowed domestic tourism and some international travel modicum. The consumer confidence
index plunged from -9 in the first quarter of 2020 to an all of -33 in the second quarter and
easing off to -23 in the third quarter as a result of COVID-19 (Bureau for Economic Research,
2020).
The decline in consumer confidence is an indicator of how depressed consumers were
about the state of the economy, which had an adverse impact on tourism product purchase as
tourism is often considered a luxury and often sacrificed when making budget priorities in
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challenging economic conditions. The poor performance could also be attributed to travel fear
as some people feared going out, which could expose them to infection risk. This was not
unique to South Africa alone. According to Zheng, Luo and Ritchie (2021), COVID-19 induced
travel fear amongst tourists, which impeded tourism recovery.
As shown in Figure 3, one of the sectors affected by the lockdowns were botanical
gardens, nature reserves and national parks. This resulted in cash challenges for the national
parks, which get a substantial amount of its finances from gate takings and other park visitors'
charges. To maintain its mandate of biodiversity conservation of biodiversity, South African
National Parks reprioritised R961 million to cater for a decline in tourists revenue due to the
impacts of COVID-19 on travel to national parks (Parliamentary Monitoring Group, 2020).
The announcement of level 2 lockdown restrictions beginning the 17th of August 2020 opened
up interprovincial travel. The announcement of level 2 resulted in a rush to national parks,
which resulted in the booking platform crashing due to increased demand for accommodation
in national parks (SABCNews, 2020).
Although the demand grew at some point between September and December 2020, the
demand was not enough to offset earlier losses. Accommodations in national parks could not
take on 100% bookings in a strive to ensure physical distance in accommodation
establishments. This affected revenue collection by South African National Parks. There were
fears that this could adversely affect conservation efforts and programmes in a number of
national parks. The results concur with earlier findings by Smith et al. (2021), who pointed out
that national parks were facing financial difficulties as a result of low visitor numbers due to
the adverse impact of lockdowns and the COVID-19 induced challenges. Given the centrality
of national parks to biodiversity conservation and heritage protection, there is, therefore, a need
to provide urgent funding mechanisms to ensure that national parks in the country continue to
play their critical conservation role. Such funding could be sourced from either the private
sector, government, private citizens and other international institutions to ensure that critical
work such as anti-poaching activities is unhindered by the COVID-19 disturbances.
Impact of COVID-19 lockdowns on South Africa’s aviation industry
The aviation industry, which forms part of the tourism industry's travel sector, was one of the
hardest hit. The sector witnessed the collapse of more than three major airlines: South African
Airways (SAA), British Airways (operated by Comair) and its sister company Kulula and
South Africa Express due to COVID-19. South African Airways, a national flagship airline,
had not made a profit for close to a decade and heavily depended on government bailouts due
to political interference and poor management. The advent of COVID-19 crippled the airline
that was already under bankruptcy protection. From March 2020 to March 2021, the airline
hasn’t made any commercial flights which worsened the airline’s fortunes. The pandemic
forced the airline into bankruptcy and was subsequently placed under administration. In order
for the rescue plan to work, the government of South Africa, which owned the airlines, needed
about US$0.6 billion to fund the restructuring plan. External investors were therefore sought
to fund the new airline meant to replace South African Airways. The South African Express, a
sister company to SAA, was placed under business rescue on 6 February (Flight Global, 2020)
before the tide of COVID-19 sent the plans off rail forcing the airline into liquidation in May
2020.
On the other hand, one of the most efficiently run commercial airlines in the country
and the region, Comair, ran into trouble when the COVID-19 strike in March 2020. The
COVID-19 pandemic forced Comair into voluntary business rescue in May 2020, aiming to
safeguard the company and its stakeholders from an inevitable collapse (Comair, 2020).
According to Aviation Tribune (2020) report, the plan was to get Comair back into the skies
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by December 2020, and it reduced its workforce from 2 200 employees to 1 800 through
voluntary retrenchment and early retirement programmes. To make the plan a success, Comair
required about US $82 million from external sources. The financial troubles of Comair were
compounded by the grounding of 737 MAX 8, where the company had purchased 8 Max 8
aircraft as part of its fleet renewal programme for about US$0.53 billion (R9bn) (Business Day,
2020), which increased its financial vulnerability as it had recorded a loss of about US$37
million (R564 million) in May 2020. The situation is not unique to South Africa, as, across
the world, airlines faced rating downgrades and other operational challenges due to the
pandemic (Dube, Nhamo & Chikodzi, 2021; da Silveira Pereira & de Mello, 2021).
It is the ravaging impact of the national and proxy regional airline industry, which is of
concern to the tourism and airport industry. These had a serious impact on the mobility of
tourists once the industry opens up. Given that the British Airways operated by Comair and
SAA were the most prominent commercial airlines prior to the pandemic that connected the
world to the region and the domestic tourism destinations, their problems had a potential
negative impact on the access of tourists to destinations (See Figure 1). Given the challenges
faced by the commercial airlines in South Africa, the market was left open to low-cost airlines
such as FlySA Fair and Mango and one other commercial airline SA Airlink.
South Africa has a relatively large domestic air travel market that has been growing for
years. Its offering comprises budget and commercial airlines. The dominating airlines include
SAA, SA Airlink, British Airways operated by Comair, FlySafair and Mango in the main. The
collapse of commercial large commercial airlines could leave the market dominated by budget
airlines. Due to demand and supply forces, this could push up the costs of travelling and hurt
domestic and regional tourism growth when aviation is supposed to provide the much-needed
impetus to domestic and regional travel. Some destinations would also suffer immensely as
they weren't serviced by the predominant budget airlines.
It is important to note that the pandemic's adverse impact on the aviation sector had an
adverse impact on various airport companies in South Africa and the region. The Airport
Company of South Africa sounded alarm bells when it announced its financial results for the
year ending March 2020 as it indicated that it was setting aside R270-million in provision for
doubtful debts (Airport Company South Africa, 2020). This was amidst a decline in arrivals,
departures and closure of various airport shops. The loss of parking fees had a considerable
impact on airport revenues. Airports have a considerable business that was disrupted by
COVID-19 across the world with financial and long time operational implications for the
present and the future. There was, therefore, a need to provide stimulus aid in the form of
finances to allow the airports to retool and prepare the necessary technology in ensuring
biosafety control at airports. This includes purchasing screening equipment, purchasing
contactless technology to ensure touchless travel, and ramping up efficiency as part of
initiatives to reduce tourists' chances of infection at airports.
The impact of COVID-19 on the South African tourism and hospitality industry
The aviation industry has not been the only casualty of COVID-19, as the closure of borders
and ports of entry also had a devastating impact on the hospitality industry. An initial survey
by the Tourism Business Council of South Africa that surveyed 1610 respondents revealed that
at the end of March, soon after the announcement of the lockdown on the 26th of March, the
tourism industry was thrown into financial turmoil (Tourism Business Council of South Africa,
2020). As a consequence of the pandemic, 83% of tourism businesses reported a 50% decline
in revenue on a year to year basis, with 2019 as a base year. The remainder indicated that they
had realised a 100% revenue loss in their business operations in March. Consequently, 54%
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of tourism businesses were unable to meet their fixed costs expenses, whereas 58% of tourism
businesses were unable to service their debt in March.
The prolonged locked down and closure of leisure tourism that only opened in August
led to further deterioration of the situation and led to severe financial losses. Stats SA (2020)
report showed that as of May 2020, revenue losses by the accommodation sector had plunged
to record lows. Figure 4 shows that between April and July 2020, most accommodation
establishments collected less than 10% of the revenue they had collected in 2019. Business
picked up between August and October 2020 as domestic and international travel was opened
during the same period. Even though gains were not adequate to offset losses, there are clear
signs of the sector’s resilience, with most gains being realised in Caravans, campsites and guest
farms (Figure 4). Given that most campsites are located in national parks and game farms, this
is expected to have resulted in improved revenue standing for many conservations areas such
as national parks and private nature reserves. This could have provided some needed relief
from the continued losses that characterised the sector post- 11 March pandemic declaration
by the World Health Organization.
Hotels Caravan parks and Camping Sites
Guest-houses and Guest Farms Other accommodation
Total Accommodation
40
20
0
-20
-40
-60
-80
-100
-120
Figure 4: Year-on-year percentage change in income from accommodation at current prices by type of accommodation
due to COVID-19
Source: Author Data from Stats Sa.
There were serious revenues losses across the accommodation industry, running into billions
of Rand, with the worst month being April and May 2020. The opening up of corporate travel
under level 3 did very little to cheer up the accommodation industry in June as the industry was
still operating at less than 10%, with revenue levels remaining very low (Figure 4 and 5).
Revenue within the accommodation sector slightly improved with easing lockdown
restrictions, with the most improvements witnessed in October after lockdown measures were
instituted, which paved the way for domestic and some international travels. The year 2020
was the worst financial year in recent memory for the accommodation sector. Therefore, any
recovery efforts needed to understand the need for an injection of liquidity to allow the industry
space to fund operational and capital expenditure. COVID-19 presents a unique situation
whereby accommodation establishments need retooling through the purchase of sanitising
equipment to cater for deep cleaning needed to keep accommodation establishments clean and
safe.
279African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
Copyright: © 2020 AJHTL /Author(s) | Open Access – Online @ www.ajhtl.com
Therefore, it is not surprising that some tourism companies with large hotel portfolios
experienced losses which called for restructuring and retrenchment. Sun International, a hotel
company with a footprint across South Africa, indicated that it had realised a half year decline
of R3.7 billion, down from R8.5 billion. The EBITDA (earnings before interest, taxes,
depreciation, and amortisation) declined 96% from R2.1 billion to R79 million. Consequently,
the company retrenched 2300 employees to bring down its wage bill (Fin 24, 2020). In addition,
the company shelved all capital investment projects and resorted to selling some of its assets
to raise the required liquidity to try to make up for the shortfall. The picture was not very
different across the sector.
3000
2500
Revenue in million Rand
2000 2015
2016
1500
2017
2018
1000
2019
2020
500
0
Figure 5: Impact of COVID-19 on South Africa accommodation industry revenue
Source: Author Data from Stats SA.
The iconic Mount Nelson Hotel dismissed 154 of its 251 employees at the peak of the
pandemic. Another hotel group City Lodge reported a profit of R205.5 million in 2019,
witnessed a turn in fortunes, realising a plunge of R486.6 million in losses in the financial year
that ended in June (Business Day, 2020b). Consequently, the company was looking for a capital
injection of R1.2bn cash injection from shareholders with the expectation that it will break even
in the last quarter of its 2021 financial year, which ends in June 2021. There were early signs
of recovery which resulted in the occupancy rate rising from 4% between March and June and
rising to 7% in July and 10% in August, with the expectation that this figure would rise further
in September as larger parts of the economy opened. However, in March 2021, City Lodge
went on to report a R550 million loss in the year 2020 due to subdued bookings as the pandemic
persisted (Business Day, 2021a).
There were also concerns over the survival rate of tourism establishments in the
disaster-ridden Western Cape, which experienced a double tragedy after the ravaging impact
of the worst drought in the area dubbed Day Zero (Dube, Nhamo & Chikodzi, 2020b) and the
occurrence of COVID-19. The drought financially compromised several businesses by the time
the pandemic struck, and they were vulnerable to business failure. Cape Town Tourism (2021)
report shows that as of January 2021, about 70% of tourism businesses were open, with 30%
closed down either due to lack of adequate market and permanent closures. The adjusted level
280African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
Copyright: © 2020 AJHTL /Author(s) | Open Access – Online @ www.ajhtl.com
3 lockdown that was instituted at the end of 2021 was estimated to have costed Cape Town
Tourism about R2 billion and left 11,583 people jobless as the industry was largely driven by
the domestic market, which accounted for 68% of the bookings market share and the remainder
being the international market.
Tourism recovery prospects in South Africa
The country's tourism industry is robust and has demonstrated its capacity to recover and
rebound faster than any other economic sector. The advent of COVID-19, while posing one of
the greatest threats to the industry, provided the sector with an opportunity to restart and find
innovative ways to weather the coronavirus pandemic. The discovery of vaccines is likely to
provide much-needed relief and provide an impetus for recovery. If well adopted, vaccines
coupled with health and safety protocols could provide the opportunity to operate optimally
and reduce the losses seen in the year 2020. The gazetting of the draft National Norms and
Standards for the Safe Operations of Tourism Sector in the context of the Coronavirus COVID-
19 and beyond by the National Department of Tourism (2021) is a step in the right direction
for the sector as it battles reopening.
The standards will allow the sector to adopt similar standards and ensures the safety
and health of tourists. This could likely trigger the necessary impetus required to encourage
people to travel. Shin and Kang (2020) reiterated the need for ensuring the need for health and
safety as crucial to tourism recovery as COVID-19 triggered safety anxiety amongst tourists
(Matiza & Kruger, 2021). According to Seyitoğlu and Ivanov (2020) proposed the use of robots
in service delivery to ensure physical distance and inspire a sense of safety between tourists
and hospitality employees. Besides adopting safety protocols, there is a need for innovative
ideas to kick start the industry. Part of the recovery process needs to take onboard new
technological development in tourism destination marketing and branding using various
affordable mediums. These rebranding efforts need to take onboard tourists requirements for
health and safety. The rolling out of the country's vaccination programme and achieving head
immunity is one component that tourism branding and marketing efforts could be anchored on.
Given that the recovery process is likely to be prolonged and slow, particularly in the
international tourism market, there is a need to develop a marketing mix that focuses on the
domestic, regional, and international tourism market. This requires a closer look at the pricing
model to suit the domestic and regional tourism market demands. There are also opportunities
to tap into the advantages posed by working from home situation. The approach that is being
pursued by Cape Town Tourism in partnership with Airbnb of remote working vacation is a
case in point (Business Day, 2021b). Through this initiative, Cape Town is marketed as an
ideal place for remote working and vacation.
Conclusion and recommendations
The study was aimed at examining the impact of COVID-19 on the South African
tourism industry and its prospects for recovery. The study found that COVID-19, which
affected the tourism sector's supply and demand, resulted in business losses throughout the
tourism value chain. The pandemic ushered in a new era of losses within the tourism industry
due to the prolonged lockdown, which resulted in various tourism industry sectors, which led
to untold suffering in the various sectors of travel, tourism, and hospitality. The forced
lockdowns resulted in many airlines facing liquidity challenges and consequently being put
under business rescue and or facing liquidation. This development is likely to affect local and
regional tourism destinations serviced by the affected airlines. This is concerning as the tourism
industry resumes operations, there will be demand for fast, efficient and sustainable transport
that is also sustainable. The shedding of labour in the aviation industry as companies battle to
281African Journal of Hospitality, Tourism and Leisure, Volume X (X) - (2020) ISSN: 2223-814X
Copyright: © 2020 AJHTL /Author(s) | Open Access – Online @ www.ajhtl.com
remain afloat is also worrisome as it threatens the progress made thus far with regards to the
sector’s contribution to employment creation over the years. This could further increase
poverty in the region as the country and the region moves into the Decade of Action for
Sustainable Development Goals, which is due to lapse in 2030.
There is a need for triggers to kick start the tourism industry, and the government has a
critical role to play and could deliberately make travelling attractive and affordable by waiving
numerous levies and taxes that could reduce air tickets prices and other tourism products. As
the sector recovers, international financing could prove crucial in providing much-needed
liquidity. Such funding could come out in various forms, such as Special Drawing Rights or
Fund Against COVID-19 Economics. Such funding, however, should be specially designed to
meet every business need without leaving anyone behind. Vulnerable groups such as women
and youths need special attention in this regard. Small to medium enterprises can also be given
special attention, given their high likelihood of business failure.
While prospects for recovery for South African tourism are high, tourism and
hospitality will never be the same, and investment into health and safety must be the anchor of
recovery. Contactless travel means demand for the sector to invest more in technology to
reduce risk and ensure customer confidence. Hotels and restaurants need to invest more
resources in ensuring adherence to cleaning and other safety protocols. The delivery of
vaccines, although slow, offers some hope for the tourism industry and the general economy.
The chances of South Africa being a destination of choice for travellers across the world are
higher than the rest of the region, given its geo-political advantages as a gateway destination
to the region.
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